The Australian Fitness Industry Report 2012

Lynne Pezzullo Director, Deloitte Access Economics and Lead Partner, Health Economics and Social Policy, Deloitte Touche Tohmatsu

The Australian Fitness Industry Report 2012 1. Background to the report 2. Approach, including data sources 3. Recent times & participation trends 4. Industry composition & costs 5. Clients 6. Employment 7. Innovation 8. Industry sub sector offerings 9. Regulations and quality standards 10. Outlook

The Australian Fitness Industry Report 2012 2009: Let's get physical: The economic contribution of fitness centres in Australia 2011: Fitness Industry Workforce Report 2010 – 2020 This state of the industry report serves to: 1. raise awareness of the economic contribution of the fitness industry 2. promote ongoing advocacy efforts 3. discuss national regulation and standards 4. highlight innovation and challenges 5. identify the trends within, and their impact on, the fitness industry 6. aid decision making by Fitness Australia, including around investment opportunities

ABS reports (notably

4156.0 and 4177.0)

Fitness

Australia data (including workforce

data)

Online survey (April 2012, n=558)

Our approach

Recent times • Fitness industry revenue grew 4% pa over the past 5 years, slowing recently due to the weaker

economy & consequent reduction in discretionary consumer spending. 24/7 facilities & fitness studios had greater levels of growth, 11% & 12% respectively.

• Industry will have revenue of over $1.2 billion in 2012 with average operating profit margin of 4.5%.

Income sources

Membership 82%

Personal Training session/s

5%

Fitness subcontractor rental income

4%

Other 9%

Participation trends

• Fitness activities include ‘aerobics/fitness/gym activities’, ‘Pilates’, ‘weight training’ and ‘yoga’ categories.

• Participation in the fitness industry is 2nd only to walking in terms of overall participation with growth 2nd only to jogging.

In 2012, 3.42m Australians aged 15+ years

18.3% participate in fitness activities (2009-10, up 2.1% or

>420,000 people since 2005-06)

Industry composition & costs • This year, over 1,300 businesses are registered with Fitness Australia, about 50% of the industry

(2,550 businesses overall).

• Small businesses characterise the fitness industry - barriers to entry are low and there are very limited regulatory requirements. Nearly half (47%) of industry responses were from gyms, 30% outdoor services, 6% independent trainers, 6% studios, 4% leisure centres and the remaining 7% clubs/corporate/school/other.

• Staff wages and rent make up more than half of expenses

Sources of expenses

Staff wages 36%

Rent 27%

Marketing 5%

Commissions 4%

Utilities 4%

Cleaning 3%

Other 21%

Client profiles • 90% clients visited their fitness centre once or twice per week

• Commitment to their club was dependent on access to professional staff (74%), overall atmosphere of the facility (68%), and availability of machines in working order (67%)

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15-17 18-24 25-34 35-44 45-54 55-64 65+

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Age group

Males Females• Main barriers to attracting new

customers included an unstable economy, too much competition, and customers’ lack of awareness of service offerings (Sweeney Research 2009)

• Increases in older age groups are expected over the next few years

Employment • About 75% of all exercise professionals (≈ 30,000) are registered with either Fitness Australia

or Physical Activity Australia

• More females in the industry (56%)

• 53% (of all professionals) are aged between 22-39 years. Only 4% are >55 years

• According to the ABS, 68% of the fitness professional workforce were employed as casuals, 12% permanent part time, 18% permanent full time and 2% are working proprietors and partners

• Further details are in Fitness Industry Workforce Report 2010 – 2020

Innovation • The industry is dynamic and sensitive to new fitness trends both locally and abroad.

• The use of technology is increasing the interaction between the club and client and promoting online products and programs.

• Survey responses indicated businesses seek to differentiate through services provided rather than by price reductions or advertising.

• Focus is on quality provided and the benefit or overall value to the client.

Offerings Ageing population

New spending habits

More emphasis on wellbeing

• Allied heath services such as massage, acupuncture and allied health services are being integrated into business models to further expand market reach.

• According to survey respondents, about 8% of clients are being referred to medical or allied health services and 11% are referrals from such services.

Influencers

Traditional offerings still matter

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10 Survey participants were asked to rank a selection of fitness services according to the importance of each to their business. Traditional offerings ranked highest.

Regulation • Regulation, codes and quality standards for the industry remain fragmented, both in scope and in

requirements. However, survey respondents were aware of and understood regulatory obligations in general.

• 49% viewed regulation as a net benefit and 31% were indifferent to it. Reasons included: it enhances and maintains the credibility, integrity and quality of the industry. It keeps the industry ‘honest’.

• Those opposed said it was a net cost because the regulation does not apply to the industry as a whole, so those who are not trained or registered to practise may provide a substandard service.

• Others expressed concern around the cost of compliance, including adhering to award wage rates and legal/insurance costs incurred, or that being registered did not provide significant benefits above the cost at an individual level.

Quality standards • Fitness Australia is currently in the process of developing an industry-wide quality framework, which

aims to enhance standards of professionalism, care, safety and service within the fitness industry.

71% said the new standards

would, or may be,

an improvement for their business

Outlook • The fitness industry, relative to the broader industry group of sport and

recreation, has been growing at a faster rate in employment, wages, revenue and value added.

• Drivers are the increased wealth of Australian households, urbanisation and increasing time pressures.

• The fitness industry influences the economic wellbeing of other industries. Economic links comprise direct and indirect economic contributions. In total, the direct and indirect fitness industry contribution to GDP is worth $1.4 billion.

• Under the projections demand is estimated to increase from 3.42 million participants in 2012 to 7.15 million by 2020.

Opportunity

• The incidence of physical inactivity related and obesity related disease increases and the population ages - the need for the fitness workforce to be able to contribute to the management of health issues is growing.

• One of the biggest opportunities currently for the fitness industry is the potential to link in with the general and allied health sector.

• Australian Institute of Health and Welfare: “participation in physical activity has important benefits for the physical and mental health of Australians, and for social and cultural values in our communities” (Armstrong et al 2000).

• In 2011, 7,516 potential cases of chronic disease (cardiovascular disease, Type 2 diabetes, osteoarthritis, cancer) were averted due to fitness memberships. This equals savings of ~$77 million to the Australian economy.

General information only

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